Fedex, UPS upbeat on holiday shipping despite recession's hangover

FedEx (FDX) and United Parcel Service (UPS) are gearing up for a busy holiday season with expectations of record-setting numbers of shipments. Their upbeat estimates fly in the face of tepid retail sales and expectations that recession-weary consumers will keep a tight rein on purchases this year.

"The consensus is flat, but I believe it will be slightly better than that," UPS CEO Scott Davis said of holiday demand. Speaking Wednesday at a meeting of Asia-Pacific corporate and political leaders in Singapore, Davis said that many of the company's retail and technology customers "are quite bullish on this Christmas season," even as others remain cautious, Reuters reported.
On Tuesday, FedEx said it expects to ship more than 13 million packages on Dec. 14, the day it anticipates will be its busiest of the year. If the prediction holds, it would result in an 8% increase compared its busiest day of 2008, when it shipped 12 million parcels. Last year's increase in shipments was bolstered by a partnership with the U.S. Post Office and rival DHL's decision to exit the U.S. market.

The year-to-year rise follows a trend of increased consumer buying at online retailers, which usually results in goods being shipped directly to consumers' homes.

Shipping Prices to Rise in 2010

Memphis, Tenn.-based FedEx based its holiday forecast on talks with large customers and brightening economic data. "Clearly [last year] we were in the midst of the worst recession since World War II," Mike Glenn, executive vice president of market development, said in an interview with The Associated Press. "But there are a number of factors that are encouraging as we head into this peak season."

UPS's expectations of a brighter holiday season come just a month after the Atlanta-based company reported quarterly earnings fell 43% percent. At the time, UPS said it remained unclear just how busy the season would be.

In anticipation of growing volumes heading into next year, CEO Davis told Reuters the company will hike shipping rates for 2010. The move follows a similar move by FedEx, which plans to announce later this month how much it plans to increase rates.

"I think we will go back to see positive volumes next year as the economy improves," Scott told the news agency ahead of the Singapore meeting.

Both FedEx and UPS typically release their holiday peak predictions in November. Last year, however, neither company made predictions, citing economic uncertainty.

UPS could release a more specific prediction later this month, AP reported.